Citigroup owned hedge fund Old Lane is putting in fresh money in KVK Energy & Infrastructure Ltd (KVK) in a deal worth Rs 116 crore, VCCircle has learned. KVK is the holding arm of various infrastructure projects of Hyderabad-based KVK Group.
Old Lane co-founded three years ago by Citigroup CEO Vikram Pandit, will subscribe to compulsorily fully convertible debentures of KVK. Although, it is not clear how much stake will Old Lane eventually hold, after conversion of the debentures into equity the total foreign direct investment in privately held KVK will go up from 33% to 70%.
For Old Lane, this would be a follow-on investrment into KVK Energy & Infrastructure. It had originally announced an investment of around $26 million in November 2007 to pick a significant minority stake in the Indian firm.
Among its other investments in India include Sical Infra Assets where Old Lane put in a similar $26 million sum for 26% odd stake two years ago. Through its joint fund with JM Financial Old Lane also has an exposure in microfinance organisation Spandana Sphoorty Innovative Financial Services.
The new investment from Old Lane comes after a failed attempt by KVK to raise funds from the AIM market in London. In early 2008, KVK Group planned to raise $100 million through a Mauritius based entity S&S Infrastructure, which inturn was to float an initial public offer(IPO)
at AIM. S&S Infrastructure was to invest Rs 137.9 crore for 70.34% equity stake and also proposed to infuse an additional Rs 262 crore through either convertible debentures or preference shares.
But, given the state of the global financial markets S&S Infrastructure could not float the issue to pump it back into KVK. As a result, the Rs 400 crore fund infusion from this Mauritius-based
firm did not materialise.
KVK has around half a dozen operating power plants besides a string of other projects in various stages of implementation. While it has minority stakes in a few power projects, in others it has a
substantial equity stake of 50% or more.